Chapter 1

Corporate Governance: The Link Between Corporations and Society

The U.S. Corporate Governance System

Today’s U.S. corporate governance system is best understood as the set of fiduciary and managerial responsibilities that binds a company’s management, shareholders, and the board within a larger, societal context defined by legal, regulatory, competitive, economic, democratic, ethical, and other societal forces (Figure 1-1).

Figure missing

Figure 1-1. The U.S. corporate governance “system”.


Although shareholders own corporations, they usually do not run them. They elect directors, who appoint managers who, in turn, run corporations. ...

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